Fortescue to offload stake in rail, ports
Speaking in Hainan, Mr Power said there was strong interest in The Pilbara Infrastructure (TPI) business and although it was not a "must deal" situation, Fortescue was hoping for a sale "to accelerate our debt pay-down and move towards an investment-grade credit rating," he said. "By mid-year we will get the process completed.
"The company would then look at completing 155 million tonnes a year of iron ore production."
Some analysts estimate the selldown of TPI could fetch as much as $5 billion depending on the structure of the deal, including whether the rail and port is opened up to other iron ore miners.
Mr Power said he was confident the next two decades would be strong and iron ore prices over the next few years would remain above $110 a tonne.
"It is hard to predict five years out, but for the foreseeable future nothing will shock or impact the price for some time," he said.
Fortescue aims to increase iron ore production to 155 million tonnes a year, with more than 90 per cent going to China.
Mr Power said the urbanisation of China was a critical driver of the Chinese economy that required steel and iron ore.
He said Chinese President Xi Jinping made an encouraging speech at the Boao conference on Sunday, focused on lifting China out of poverty.
"President Xi's comments were reassuring in the underlying demand for steel in China for some decades to come," Mr Power said.
Frequently Asked Questions about this Article…
Fortescue Metals Group has said it is on track to sell a stake in its rail and port business, The Pilbara Infrastructure (TPI). The company described it as a selldown of TPI rather than a full divestment, but the exact percentage was not specified in the article.
Fortescue’s CEO Nev Power said the company expects the TPI stake sale process to be completed by mid-year.
Some analysts estimate the selldown of TPI could fetch as much as $5 billion, though the final value will depend on the deal structure, including whether the rail and port are opened up to other iron ore miners.
Fortescue says the sale is intended to accelerate debt pay-down and help the company move towards an investment-grade credit rating. CEO Nev Power described the deal as desirable but not a "must".
Yes. Following the planned sale, Fortescue said it would look to complete 155 million tonnes a year of iron ore production, a key operational target mentioned by management.
CEO Nev Power expressed confidence that the next two decades would be strong for demand and said iron ore prices over the next few years would remain above $110 a tonne. He noted that nothing foreseeable would likely shock prices in the near term.
Fortescue said more than 90% of its iron ore output goes to China. Management pointed to China’s urbanisation and demand for steel as critical drivers of long-term iron ore demand.
Everyday investors should note that Fortescue plans a mid-year selldown of TPI aimed at accelerating debt reduction and improving its credit profile, analysts see potential proceeds up to about $5 billion depending on deal structure, the company plans to push production toward 155 million tonnes a year, and management is optimistic about iron ore demand and prices (expecting prices above $110/tonne in the near term), largely driven by Chinese demand.
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